HSS potential beneficiary of increased govt spending on water-related infrastructure
KUALA LUMPUR: HSS Engineers Bhd (HSS) is a potential beneficiary of increased government spending on waterrelated infrastructure and the revival of large-scale railway projects, analysts observe in a results note on the group.
In a filing on Bursa Malaysia, HSS revealed that despite market challenges, the group recorded profit a er tax (PAT) of RM0.3 million for the first quarter ended March 31, 2019 (1Q19), as compared to RM0.8 million in the corresponding quarter ended March 31, 2018.
According to Affin Hwang Investment Bank Bhd (AffinHwang Capital), HSS’ core net profit of RM0.4 million in 1Q19 comprised only one per cent of consensus and the research firm’s previous 2019E forecasts of RM26 million to RM29 million.
“The share price could see short-term weakness due to the disappointing results,” Affin Hwang Capital remarked on the group’s long-term prospects.
“But we believe any share-price correction is an opportunity to accumulate the stock.
HSS is a potential beneficiary of increased government spending on water-related infrastructure and the revival of large-scale railway projects.” On HSS winning more water-related infrastructure projects, AffinHwang Capital gathered that the new contracts include RM31 million additional construction supervision works for the Langat 2 watertreatment plant and RM3 million engineering design works for pipe replacements in Selangor.
“HSS announced that it was appointed the sub-consultant by Perunding Teknik Glokal Sdn Bhd to provide supervision services for the Air Telibong II water-treatment plant with a contract value of RM3.7 million.” To recap, on the same day HSS released its 1Q19 results, the group also announced that associate company SMHB Sdn Bhd had on May 15, 2019 accepted the appointment as sub-consultant from Perunding Teknik Glokal Sdn Bhd to provide Supervision Services for Projek Penambahan Kapasiti Loji Rawatan Air Telibong II.
The contract, with a contract value of RM3.7 million, commenced on March 29 2019 and is expected to complete within 2Q21.
“Including the revival of the East Coast Rail Line (ECRL) project, new contract wins year to date (YTD) of RM152 million comprise 76 per cent of our 2019E assumption of RM200 million,” the research firm projected.